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New Maternity Law: 1.8 Million Indian Women at Risk of Losing Jobs

July 4, 2018

A new mandatory law to improve maternity perks for Indian women in the workforce and encourage them to elevate their careers is projected to bring the opposite effect, a survey by TeamLease Services Ltd found on Tuesday (Jun 26).

While the law is reportedly to make India the most progressive country after Canada and Norway in enabling women to stay in the workforce, the downside is that it might lead to job losses and discourage smaller businesses and startups from hiring women. The survey statistics estimated about 1.1 to 1.8 million women will lose their jobs across 10 sectors in the financial year to March 2019 owing to the law. If this estimate is computed across all sectors in India, the job loss number would reach around 10-12 million, the survey added.

This finding is a bad news for a country where the share of women in the workforce keeps shrinking to around 24 percent in the end of 2016 from 36 percent a decade earlier. Co-founder of TeamLease Services, Rituparna Chakraborty stated India cannot be compared to most other countries simply because it has one of the lowest workforce participation rates in the world. She added that there needs to be financial incentives to attract more women’s participation in the labour force.

As much as 300 employers across sectors were involved in the survey, such as aviation, information technology and IT-enabled services, real estate, education, e-commerce, manufacturing, banking and financial services, as well as retail and tourism. The survey revealed that while large and professionally managed companies will support the reform measure, which is fully funded by the employer, small and medium sized companies tend to choose not hiring women as they find the costs too expensive.

See: Singaporean Employees Enjoy Gender Parity in the Workplace: JobStreet Survey

In its conservative society, Indian women are often discouraged from pursuing a professional career. Better-educated women from wealthier families are rarely supported to work and this only happens when a man’s salary falls short so a women needs job. Many choose to leave job to take care of older family members or children. The World Bank estimated that in the eight years since 2004, about 20 million women vanished from India’s workforce, Bloomberg reports.

To stem this condition, Prime Minister Narendra Modi’s government introduced a law that entitles women working in the organised sector to 26 weeks of paid maternity leave, up from the previous 12 weeks. The costs have riled many businesses. Post-maternity retention could cost 80 percent to 90 percent of the annual salary for white collar employees, and up to 135 percent of annual salary for blue collar employees, the survey said.

“These kind of reforms are essentially supported by proactive governments across the world with complementing tax concessions, which are missing in India,” said K. Sudarshan, managing partner for India at executive search firm EMA Partners International. “Small and medium sized companies generally operate with less staff. If two of five women employees opt for maternity leave, that can cripple the firm itself.”

Read also: Singapore Ranks 4th in the Global Most Expensive City for Expats: Report

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